Nestle has lost a tussle with rival Mondelez International over the validity of its EU trademark for the shape of the Kit Kat chocolate biscuit bar in an EU court which said it should be re-examined.

Cadbury Schweppes -- now owned by Mondelez International -- asked the European Union Intellectual Property Office (EUIPO) to declare the Kit Kat four fingers trade mark invalid in 2007.

The EUIPO dismissed that application on the grounds that the Kit Kat shape had acquired "distinctive character" through its use.

On Thursday the EU's second-highest court annulled that dismissal.

The EUIPO will have to re-examine whether the Kit Kat four fingers bar has acquired distinctive character through its use within all EU member states, not just across the EU generally, the General Court of the EU said in a statement.

In 2006 the EUIPO registered the Kit Kat shape as a trademark in sweets, bakery products, pastries, biscuits, cakes and waffles.

The General Court, based in Luxembourg, said the EUIPO had not established use of the trademark in bakery products, pastries, cakes and waffles.

If a trademark is registered for a category of goods which also has sub-categories, then it applies only to goods where it has been put to use, the court said.

In addition, Nestle would have to prove that when it applied in 2002, its Kit Kat shape had already gained distinctive character through use in all 15 of the states that had joined the bloc by then.

It was not enough for Nestle "to show that a significant proportion of the relevant public throughout the EU, merging all the member states and regions, perceives a mark as an indication of the commercial origin of the goods designated by the mark," the Court said.

The Court said EUIPO had found that Kit Kat shape had acquired distinctive character in 10 countries -- Denmark, Germany, Spain, France, Italy, the Netherlands, Austria, Finland, Sweden and the UK -- but not in countries including Belgium, Ireland, Greece and Portugal.

Nestle said it was pleased the court had acknowledged that the four finger-shape trade mark has acquired distinctiveness in 10 member states of the EU.

"The four finger-shape has been used throughout the EU by Nestle for decades and is known by consumers as being Kit Kat," the company said. "We continue to review the findings and consider our position."

Nestle has the option of appealing against the decision before the EU's highest court within two months.

(This version of the story corrects to show court annulled challenge against Kit Kat trademark, not trademark itself; adds Nestle comment)

(Reporting by Julia Fioretti; Editing by Ruth Pitchford)

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